Editorial

Here Come the Cutbacks

“One of the more pernicious lies is that there is no money,” says Rev. Gerald Britt, a Dallas pastor who is one of the leaders of the Texas Industrial Areas Foundation. It was September 6, two days before the group had its accountability meeting in Austin where 10,000 energized activists demanded support from leading state politicians running for office. Britt was talking specifically about the state budget, and how customarily, when times are tight, the books are balanced on the backs of the poorest Texans. The argument seems to be that these people have received next to nothing for decades, so a little less won’t hurt.

According to the experts, we are in just such a time today. Estimates of the state’s deficit range from $5 billion to $12 billion. And sure enough, outgoing House Appropriations Committee Chairman Robert Junell (D-San Angelo) summed up the reigning attitude in a recent article on the budget in the Austin American-Statesman when he said: “The sky is not going to fall if, for two years, we don’t provide the type of services we have provided in the past.”

The budget process is designed to bolster the position that services for those hit hardest by the economic downturn are expendable perks. As the Observer went to press, various state agencies were submitting their proposed budgets. They are required to produce plans that operate only with the funds they received in the last cycle. Everything else is grouped under the title “exceptional items.” For example, number four in importance on the exceptional item list for the Department of Human Services is money to maintain services for family violence victims. That’s not to expand coverage which only reaches 5 percent of victims. It’s just to stay in place.

Several newspaper articles criticized the IAF after their rally for asking for more without talking about how to pay for it. But revenue is available, it’s just not being collected. Unlike most states that have a corporate income tax that businesses pay regardless of how they are organized, Texas has a franchise tax. Some have taken to calling it “the voluntary tax” since it’s so easy to evade. The Comptroller’s office estimates that the state lost $150 million this year from companies who, to escape taxes, organize themselves as partnerships rather than franchises. Extending the sales tax burden to businesses would also help. Dick Lavine at the Center for Public Policy Priorities estimates that taxing business and professional services could raise $3.5 billion a year, even after exempting doctors, dentists, and other health care services. Closing another loophole–there is no penalty for businesses that don’t pay their property taxes–would bring the state another $900 million, according to tax appraisers. State Senator Gonzalo Barrientos recently pledged to introduce a bill to fix the problem. It’s not a question of finding money, it’s a matter of political will.

Throughout the 1990s, during the economic bubble, fat cats across the state gorged themselves, often fraudulently. They demanded and received government subsidies. Many companies “moved” offshore to avoid taxes. It’s now time that they pay their fair share.

Unfortunately, in the contest between business lobbyists and the working poor, the latter seldom win. The IAF is trying to change that by electing more people-friendly politicians, but it must also keep the pressure on the entire legislature once they are in office. “If it calls for a reallocation of resources, even if that’s intimidating, we are not taking no for an answer,” vows Britt. —JB